Question - A two year contract was completed in 2012. The project controller discovered that a $60000 down payment that the customer made in 2011 was recorded as revenue when received. But this payment should have been recognized as revenue equally over the two years of the contract (2011 and 2012).

On January 1, 2010, the company leased warehouse space for four years. The monthly rental is $13000. On January 1, 2010, the company paid the following amounts, which were expensed when paid:

Damage deposit $35000

First month rent 13000

Last month rent 13000

61000

Prepare any adjusting entries at December 31, 2012. Assume the books for 2012 are still open, but all previous years are closed. Ignore any income tax effects.